Learn the Art of Doing Nothing
Top 5 of the Week of December 26
In the run-up to New Year’s Eve this week, we kick off with Ben Carlson’s wisdom on the art of doing nothing from his blog, A Wealth of Common Sense. Morgan Housel, a partner at the Collaborative Fund, discusses the neglected truths for successful business and investing. And Clare Flynn Levy of Essentia Analytics shares some simple ways to improve our investing processes with behavioral science.
Michael Regen gets the lowdown from Jack Bogle on investing in his interview for Bloomberg Markets. And Ian Domowitz explores the nuances of Quantamental Fundamentalism for Analytics Incubator…
Do Nothing to Avoid Investing Mistakes
- Being inactive while other investors around you are trying to pick new stocks, guessing at interest rates, and estimating where company shares are going is difficult
- But by learning the art of doing nothing you can intrinsically save yourself from making huge errors
- Any portfolio move needs to be carefully thought out and considered
- The real strategy for successful long-term investing is saying no repeatedly and using a filter to help you turn down the wrong investment ideas
Vital Skills for Business and Investing Success
- Empathy will get you far, start to consider other people’s driving factors to better understand them
- Encourage honesty, admitting you don’t know something is humility not ignorance
- Don’t let your intelligence be overshadowed by your ego, lack of communication, refusal to alter your perspective and inability to meet people halfway
- Accept your failures and learn from them—lose with grace
Applying the Lessons of Behavioral Finance
- Use a daily 10-minute review on the decisions you’ve made—be frank with yourself about your performance, it will reflect in your future investment decisions
- Follow a behavioral checklist whenever you are considering a trade, this will help you stay disciplined and focused—does the stock meet your particular criteria?
- Be aware of your cognitive load, by trying to absorb too much you’re in danger of overload, which will impact your judgment calls—eliminate your “grunt work” with a to-do list
Are you a disciplined investor? Share your methods and comments in the section below
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Jack Bogle’s Investing Insights—“The Math Is the Math”
- Jack Bogle is the financial legend behind the first index fund dating back in 1976, a passive strategy which matches or tracks a market index (like the S&P 500)
- He argues in favor of broad market exposure, low operating expenses, and low portfolio turnover, though many investors are criticizing the passive index approach
- The market trend pendulum may swing back and forth for those in favor and against, but index funds aren’t yet at the end of their cycle, they’re still evolving and growing
The Latest Industry Fad: Quantamental Investing
- The newest investment approach to help investors deal with the twin challenges of market volatility and low growth rates; quantamental investing
- The aim is to achieve a hybrid of human insight that you would normally get from a fundamental approach, together with the quantative discipline
- But new concepts don’t always equal new comprehension, as with any new fad; always ask questions before employing the strategy
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!
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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.